Part IVA of the Income Tax Assessment Act 1936 is a general provision against tax avoidance arrangements that, objectively viewed, are entered into for the sole or dominant purpose of enabling a taxpayer to obtain a tax benefit.
The definition of a scheme is very broad. It encompasses not only a series of steps which together constitute a scheme or ‘plan’, but also (by reference to ‘action’) the taking of just one step. Because the scheme can cover so much, it is usually more important to work out if a ‘tax benefit’ was obtained.
Part IVA, would it be objectively concluded that you or any other person entered into the scheme or carried out the scheme, or any part of it, for the sole or dominant purpose of obtaining the tax benefit?
Form and substance of the scheme
Substance rather than form is the focus. The substance of the scheme is what the taxpayer may achieve by carrying it out, whether part of the form of the arrangement or not Where the substance of the transaction (tax effects aside) could more conveniently, or commercially, or frugally have been achieved by a different transaction or form of transaction points to the particular form chosen as a means to obtain a tax benefit.